How to Make School Funding Fair

In its final report released in February, the U.S. Department of Education's Equity and Excellence Commission issued a clear and powerful charge: Efforts to improve our school system "must start with equity"—particularly the equity of resources. To achieve this goal, the commission, of which I was a member, instructed all levels of government to improve or redesign their methods of funding schools in order to adopt truly equitable funding systems.

In calling for equity in funding—which the commission defines as providing sufficient resources "distributed based on student need, not ZIP code"—the report tells policymakers the "what" of school funding reform, laying the groundwork for improving school quality.

Missing from the report, however, is the "how": How should or could the federal government, states, and local districts implement this bold principle of funding equity? Secretary of Education Arne Duncan said that the report "compels us to act," but how should each level of government do that? Leaving it up to each level to figure out is a recipe for inaction.

Here's what I think needs to be done. At the federal level, Congress should remedy Title I of the No Child Left Behind Act's complex and often unfair method for allocating federal dollars to schools with children in poverty. It should follow recommendations from my organization, the Center for American Progress, on reforming Title I's four funding formulas to create one formula that better targets schools with high concentrations of students in poverty. This honors the law's intent of providing additional education resources for children with the greatest educational needs.

At the local level, funding inequity is found in the unequal distribution of resources among schools within the same district, with high-poverty schools often receiving less funding than their low-poverty counterparts. To address this inequity, districts need to change the way they allocate resources to schools, adopting the practice of allocating actual per-pupil dollar amounts, weighted based on the needs of students in that school. Currently, most districts allocate teacher slots to a school—that is, one teacher for a specified number of students. Teachers are not all paid the same amount, however. Treating them as if they were paid equally masks the fact that a school with five 20-year veterans receives more dollars overall than a school with five first-year teachers.

—iStockphoto.com/fatido

Larger questions surround what states should do to address funding inequities between school districts. Most states have adopted funding formulas aimed at ameliorating differences in the ability of districts to raise funding from local property taxes. Property-wealthy towns are able to raise more dollars at lower tax rates than property-poor districts, leading to inequities in per-pupil funding. Yet, as the commission report points out, prior attempts to address these inequities, such as through state funding formulas, merely patch a broken system and fail to redress inequities or to produce the kind of academic achievement our children need and deserve.

The time has come to strongly consider the need for larger systematic reform of funding systems. In a chapter in the recently released book Education Governance for the Twenty-First Century: Overcoming the Structural Barriers to School Reform, I propose a "new" approach to school funding: States should adopt a state-based system of school financing—one in which states provide all nonfederal resources for education, and districts no longer have the power to raise funds from local property taxes.

Under such a system, all districts would receive the resources they need to educate all of their children. Funding levels would be based on the specific needs of the students and of the districts, not just the resources districts are fiscally able to raise based on local property values. Local schools and districts would be able to provide additional funding of up to 10 percent of their state allocation for local priorities and programs.

I say "new" in quotation marks because this is almost the same proposal President Richard M. Nixon's Commission on School Finance called for in 1972. Yet, more than 40 years later, almost no states have taken this approach, and the idea has practically fallen off the radar in school funding discussions. Hawaii and Vermont come the closest, with less than 10 percent of total funding coming from local sources. They are rarities in this country, however, and by far two of the smallest states.

I also say "new" because this method of funding schools has been adopted in other countries; it's just "new" to the United States. As a paper that CAP released last week shows, three Canadian provinces, for example, have each moved from joint local-provincial school funding systems—systems like those in most U.S. states—to provincial-level funding systems. Under such a system, the province has full responsibility for providing all funding for public schools, according to the report titled "Canada's Approach to School Funding." The province determines the resource needs for each district and ensures the district actually receives that funding.

“The time has come to strongly consider the need for larger systematic reform of funding systems.”

These provinces—Alberta, British Columbia, and Ontario—have each taken a unique approach to designing their provincial-level funding systems. Alberta, for example, has set up a centralized fund into which all property-tax dollars raised for education purposes flow. These dollars are then allocated on a per-pupil basis to every district in the province. Additional funding is provided by the provincial government on top of this allotment. In contrast, in Ontario, local school districts continue to raise funding from local property taxes, but the tax rates are set by the provincial government. This allows the province to ensure that districts raise amounts consistent with the districts' overall provincially determined funding needs, and not inconsistent with principles of equality and equity.

To be sure, states can certainly have equitable funding systems that continue to allow local districts to set their own tax rates and raise money from local property taxes. New Jersey and Ohio are good examples; in these states, differences in property wealth do not dictate differences in per-pupil spending, and districts with greater educational needs receive additional funding. But most states have failed in this regard, despite decades of lawsuits and so-called reform efforts. It's time to try something else.

The National Commission on Excellence in Education's seminal 1983 report, A Nation at Risk, warned of a "rising tide of mediocrity" in this country. I worry today that mediocrity is found as much in our legislatures as in our schools. We need bold leaders with the political strength to tackle the problems in our system and fight for the solutions we need. Adopting a state-level system of funding education is an essential element of finally providing all children with a high-quality education.

Cynthia G. Brown is the vice president for education policy at the Center for American Progress, in Washington.

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